Racing the Machine

Economists have always believed that previous waves of job destruction led to an equilibrium between supply and demand in the labor market at a higher level of both employment and earnings. But if robots can actually replace, not just displace, humans, it is hard to see an equilibrium point until the human race itself becomes redundant.

LONDON – Dispelling anxiety about robots has become a major preoccupation of business apologetics. The commonsense – and far from foolish – view is that the more jobs are automated, the fewer there will be for humans to perform. The headline example is the driverless car. If cars can drive themselves, what will happen to chauffeurs, taxi drivers, and so on?

Economic theory tells us that our worries are groundless. Attaching machines to workers increases their output for each hour they work. They then have an enviable choice: work less for the same wage as before, or work the same number of hours for more pay. And as the cost of existing goods falls, consumers will have more money to spend on more of the same goods or different ones. Either way, there is no reason to expect a net loss of human jobs – or anything but continual improvements in living standards.

History suggests as much. For the last 200 years or so, productivity has been steadily rising, especially in the West. The people who live in the West have chosen both more leisure and higher income. Hours of work in rich countries have halved since 1870, while real per capita income has risen by a factor of five.

Robert Skidelsky, Professor Emeritus of Political Economy at Warwick University and a fellow of the British Academy in history and economics, is a member of the British House of Lords. The author of a three-volume biography of John Maynard Keynes, he began his political career in the Labour party, became the Conservative Party’s spokesman for Treasury affairs in the House of Lords, and was eventually forced out of the Conservative Party for his opposition to NATO’s intervention in Kosovo in 1999.

I have a friend, a legal Ukranian immigrant who can show us how it's done. He's smart, but probably not a genius, motivated to do things and learn. Recently he left a job running a manual lathe for $14/hr. While he was there he learned how to run, maintain, and program some CNC equipment they had on his own time. He's switched to a job making twice as much and was the line "expert" on a team installing three much more modern CNC machines that he programmed to make and runs all three with a helper. The value of the parts is at least 10x what he could do on a manual machine.

I know most people aren't that motivated by themselves, but he was taught to be that way in school, when Ukraine was part of the USSR. If that benighted system can do that the Western world should be able to do at least as well. Right now though, the schools are not doing nearly that well. That is where we have to focus. The current administration seems to be at least starting the process of improvement.

This is the crux of things: "...how the choice between work and leisure promised by economists can be made effective for all"

If the combination of robotic displacement and replacement is suppressing wages combined with a) employed people working the same or more hours and b) higher unemployment, then we will have a very clear problem that can be in part addressed by policy constraints on the labor market - e.g. policy that increases paid time off and limits hours worked. That is dangerous territory, but needs to be considered.

What I think the article and some of the discussion is missing is the fact that all of those "equilibria" ignore the costs and benefits for specific individuals, and assume the losers will sit pat. The unwritten assumption in economics is that whatever we analyze works in the "average", on the "aggregate". All the numbers thrown about above are averages valid on the aggregate. There will be winner ans losers and we cannot continue to make the assumption that they average out or that all it matters the average growth. Growth of 3% may be fantastic, but many people "did not grow", did not benefit from this growth, actually lost significantly. And the same will have with the "average impact" of automation.

All our aggregate and on the average analysis show that globalization is good. But witness Trump, Brexit and populist movements on the left and right. People are not content with improving quality of life "on the average" and have and will rebel.

I believe the same will happen ti automation and job disruption. At some point there will a revolt, democratic or not, to protect the quality of life of the losing majority.

Leaders have to look beyond averages, aggregates and monetary values and start to consider the impact on inequality and morals before making "economic" decisions.

Cost benefit analysis of any policy has to include the value of human values, quantifiable or not, will have to value the benefits to the well off less than the values to less well off. Or, eventually, we will have a revolution.

"... if we cannot hope to control this world, what is the value of being human? These questions may be outside McKinsey remit, but they should not be off limits to public discussion."

The first point to acknowlege is the *shocking* fact that the global leadership have totally avoided this debate. It is inconceivable that leaders who are, of necessity, amongst the most well informed people on earth, don't know in great detail what is round the corner - which begs the question: why this debate is *not* being held loudly and in full public view? Note that no one, not Trump or Clinton, not May or Corbyn, not Merkel or Abe or Modi or Xi or Putin - absolutely *none of them* want to have this debate in public - for the obvious reason that they won't be able to offer easy answers, for the obvious reason that answers are...not obvious. Anyone who has looked deeply into this debate also knows that possible solutions are far from obvious - for example proposals around UBI or taxing robots and software crumble at the first touch.

What is really needed (a pipe-dream I know) is honesty from the global leadership about where the tech-driven maelstrom is taking the whole of humanity: - what large-scale automation will do to employment - what happens when AI systems become too complex for us to comprehend and control - the limits of privacy in the face of the unravelling and hacking of our own geneting coding (take a look at CrisprCas9 if interested where genetic tech is headed) - schisms in humanity because of human engineered enhancements to ourselves, including age-extension, by those who can afford it.

In the area where I live we have seen a lot of new temporary staffing agencies possibly in reaction to the ACA or Obamacare. And a couple just moving into my apartment complex claims to be working five different jobs. What is really going on will be revealed in time but creating "real jobs" in a mature market or economy is not an easy task and poses difficult challenges.

Globalization has elevated the importance of creating jobs and a balanced economy that supports a strong middle class. We must differentiate the difference between creating a valuable and worthwhile product that benefits society and breaking a window then praising the jobs replacing it yields. The article below delves into what constitutes a "real job" and its value.

You are the moral problem here. You will not work diligently because you somehow believe that making profits and creating wealth only ends up in the hands of Scrooge McDuck type owners who wallow around in money.

So you won't work. You won't contribute but you like money.

You hope to retire at some point and have a nice pension. Where do you imagine that pension comes from? The government produces nothing, so to pay for a pension of value either it has to tax others, borrow money from all those rich folks you dislike, or print it.

You may wish to say then that the government should simply own the means of production. You will probably be surprised that this idea has been tried many times in the past. In each and every case it has failed horribly to produce results. Look at Venezuela today for an instructional tale.

Consequently, since you won't work, and companies must grow and produce, they turn to something that works all the time. Robots.

Billions of people don't get what they deserve. Wealth in our world is far more a product of luck than of intelligence or hard work. If you had been born into a rural family in a poor African country, would you get what you deserve? How would you make a success out of that?

Professor Skildelsky slides too faciley past the (false) myth that the market will produce an equilibrium as machines replace workers. That hasn't been true for 120 years. What has provided additonal jobs as machines did replace workers is military spending. Keynes wrote in 1929 or 1930 about the 15 hour week. Then Keynes' General Theory taught governments how to cope with recessions/depressions: military spending. Now we have perpetual war preparations as the tool to cope with automation. Keynes' 15 hour work week was a better idea.

"Philosophically, this is confused, because it conflates doing something more efficiently with doing it better."Yes.And yet the problem is more fundamental than a moral problem.It's actually a coding problem, moral code being one code.

My philosophic beef with this publication and economists in general, is a lack of understanding regarding code, including monetary code, in a physics, evolution and complexity context.

According to one accounting of the data, it took 194 billion hours of human labor to produce the economic output in 1998. In 2013, output had increased 42% about this, a total of $3.5 trillion, yet the hours of human labor remained at 194 billion - and wages had stagnated for this period.

Hard to square this data with your thoughts about how now is the same as it has always been.

With artificial intelligence on the horizon, the past is no guide to the future. Imagine a machine that is smart and capable enough that you can just tell it "Now go and make another machine just like yourself," and it will be able to do it. To me, that will be the tipping point. At that point, we just no longer need human labour. And I am sure it will come.

I agree that trying to hold back the clock is not an option. But as the need to work grows less and less, the justification for inequality grows less and less. We don't need to punish people who are unable or unwilling to work for whatever reason with starvation to try to force them to work. We can afford to divide the output of the economy (which is already largely, though not completely, the output of machines), more equitably. A basic income paid for by a sales tax would do that, and allow us to transition to a workless economy when the technology arrives.

Even if the economic problem is solved, we will still have a deep human issue. While the intellectually inclined tend to envision those freed from labor engaging in all things beautiful and brilliant, there is a reason we have phrases like "the devil will find work for idle hands to do".

There is a real and persistent dispersion in various human qualities and observation shows that a large portion of us really, really like to be engaged in some work that is largely both organized and controlled for us.

If robots are truly *replacing* us, we should have a say in how many of them may exist. They are the ultimate "aliens"...

I really don't think this will prove to be a problem. People find things to do. Doubtless, some will want to sit on a beach and drink beer. But we have lots of examples from the past of societies that did no work - the aristocratic and slave-owning elites. I would not suggest that they were ideal or free of problems, but idleness did not necessarily lead to social breakdown or misery. The foundations of our mathematical and scientific knowledge were laid by such societies, whatever we may think of them.

A "Marshall Plan" for education: Who is supposed to do the educating? Governments? Do they teach economics well? No. Do they teach computer science well? No. Do they teach creativity well? No. But there is hope: People learn with the help of gov-free MOOCs, which deserve a better name.

A friend at Microsoft who has recruited hundreds of software engineers from elite schools all over the world will attest that these schools do not produce masters students who can do much of anything.

I had to replace many workers over the past decade with robots because the people we hired would not show up to work on time, or often at all. If someone asks why we can't compete in manufacturing, I have part of the answer. As an aside, all of our positions were paid more than three times minimum wage.

Yes, and in the elite urban world, filled as it is with people who have never stepped foot on a shop floor and who avoid at all costs rubbing shoulders with the types of people you would employ, you are the bad guy for not somehow creating an engaging work environment, free from tedium and toil.

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